How AI and RPA Can Unburden Your Tax Team Right Now

It’s no secret that there aren’t enough accountants in the United States. The American Institute of Certified Public Accountants (AICPA) estimates that about 75% of its members reached retirement age in 2020. And according to a recent Wall Street Journal article, more than 300,000 accountants quit their jobs between 2019 and 2021.

While staffing shortages strain finance teams, technology companies are presenting solutions that can help businesses get ahead of tax-related work backlogs. And these tools aren’t just for big, deep-pocketed enterprises. They’re accessible and available for companies of all sizes.

Artificial intelligence (AI) and robotic process automation (RPA) can reduce your team’s mental load associated with everything you have to track, categorize and reconcile — and amplify their abilities. And the tools may be much easier to implement than you think. AI and RPA for business are already integrated into modern tax software and many platforms, such as Workday and Microsoft Dynamics.

Reinvent Your Tax Processes With RPA and AI

RPA and AI can automate processes and accelerate the work staff accountants and bookkeepers used to do. The tools don’t necessarily replace these team members, but they can make a leaner team more productive by making your tax processes more manageable and cost-effective.

Reduce errors and streamline tax tasks with RPA

RPA is a basic type of automation that’s been around for years. It helps businesses across functions and industries automate, simplify and accelerate repetitive tasks, reduce manual errors and free up staff from manual work.

Some tax work RPA augments:

• Data entry and validation: RPA can automatically extract data from invoices, receipts and spreadsheets and enter it into tax systems. And it can validate data against tax regulations. By automating the data entry, you typically can cut the staff time needed by half. You also reduce the potential for manual data entry errors like transposed numbers.
• Document management: No more manually searching shared drives and emailing around the company. RPA can quickly organize, manage and retrieve tax-related documents and give you a head start on getting tax filings out the door.
• Tax calculation: RPA can automate complex tax calculations that affect your daily and annual operations, including income, sales, VAT/GST, payroll, excise and property taxes. It can also help you calculate transfer pricing adjustments, estimate tax payments based on your projected income and expenses, figure capital gains impacts when you sell assets and give you accurate depreciation and amortization deduction calculations.
• Compliance monitoring: The main benefit of using RPA to monitor your tax compliance is that it can look at real-time activity in your financial systems (e.g., ERP and CRM) and bank accounts and flag any anomalies or discrepancies that could make you non-compliant.
• Handling repetitive tasks: RPA can look at calendars and report time to your finance systems, generate invoices and handle people tasks that finance must track (billable hours, for instance).

Work smarter, not harder with AI

Have you ever wanted a clone to help you accomplish more work faster? Think of AI as a pseudo-clone — an extension of your thought processes that helps you maximize your time.

While RPA requires a human to tell it what to do, AI can think for itself (to a point). It can learn from data, identify patterns and relationships in large data sets, and use the information to make predictions and decisions. This advanced technology can support your finance team and even become an extension of it.

Some ways AI helps you streamline tax work:

• Analyzing different tax scenarios: Generative AI like chatbots and generative pre-trained transformers (GPTs) such as Microsoft CoPilot can analyze huge pools of data and answer questions. You can prompt the AI to give you different scenarios, such as what happens if you introduce a new employee benefit or the pros and cons of a tax incentive program. This helps you make better, faster decisions and tax planning adjustments.
• Eliminating manual processes: Your new virtual staffer can do much of the heavy lifting that bogs down your days. Do you have team members cross-referencing invoices, bank statements and other customer data? AI can eliminate many of these tasks, such as cross-checking data across sources for accuracy and reconciling accounts and transactions to get ahead of discrepancies.
• Improving accuracy and data visibility: You can also use AI to extract and standardize financial data, so your calculations are more accurate, and you have more granular data visibility.
• Take Excel exports and imports off the table: In a more specific process-focused use case, you can use AI to map your output from your ERP to your general ledger to your tax accounts. You don’t need Excel exports to complicate and hang up this process anymore.

AI is a new, better way to keep up with regulatory changes

As we all know, tax laws change frequently. Keeping up with the latest local, state and federal rules is not easy. Yes, you can send your tax team to industry webinars or other regular training to help them know what’s changed and what’s coming. But will they remember all the nuances during the busy season?

AI chatbots can save you hours of research time. For instance, you could put a chatbot to work checking New York's new business tax changes instead of having a team member spend hours digging through articles. Your bot can bring back a summary and reference citation, where a human can review the information in-depth.

While this capability is just starting to make its way to the tax world, it’s here and can bring you immediate time-saving benefits. In the near future, you can expect to see even more advanced AI tools provide assistance like, “Hey, I see you’re working on a tax return for New York. Here’s the latest info on the new tax laws in that state. Make sure you review the updates before you file.”

Don’t Overlook the Risks of Old Tax Processes

We recently spoke to a business that’s dealing with 7,000 tax returns for individual investors this year. Next year, the number will be closer to 10,000. Imagine the overwhelming amount of financial data that needs to be handled and manually populated into forms. Then, everything must be reviewed and filed. Ouch. It’s no wonder that the company’s leaders are looking to use AI and RPA to cut the manual tax workload.

You may not have 10,000 returns. But if you’re still using traditional, manual processes for compiling, reviewing and filing tax documents, you’re potentially hurting your business in several important ways:

• Tax work pulls valuable people resources away from strategic activities and core business operations.
• An overload of repetitive tasks like data entry can burn out your team and increase turnover.
• You raise your risk of filing delays — especially if you need more help and can’t find staff.
• Manual tasks increase your risk of errors that can lead to over- or under-payment of taxes, as well as penalties.

What About Security and Potential AI Mistakes?

Letting AI access your data might seem scary, but it’s already a reality for many businesses. With AI embedded into industry-standard tax software, it’s becoming the best practice for tax planning, filing and compliance.

AI and automation don’t replace your human expertise; they augment it. Yes, AI can be wrong, but if you use some human checks and balances, you can streamline tax compliance with this evolving technology — for example, by using AI to quickly flag potential data discrepancies.

As a best practice, you can set up the AI capability to operate privately within your infrastructure — no public access to worry about. Be sure to verify any data gathered with AI (as you would with any other method or source) for accuracy. Here are a few guidelines for using AI within your tax processes:

• Don’t use free tools like ChatGPT for tax research and what-if scenarios. These tools aren’t always as up-to-date as the new paid solutions addressing these specific scenarios. Remember, when you add content to open-source tools, it’s like you’re posting your data in an open forum. Other people can access it, and you introduce unnecessary risks to your organization.
• Use AI tools within your own technology ecosystem. For instance, if you want to test a chatbot on its research capabilities, you can implement it within your firewalls and governance policies and ask it to search specific sources like a state tax code and provide citations.
• Look to your tax advisors for guidance. If you work with an outside tax advisory firm, they may have technology consultants to help you customize automations and AI tools to make your tax function more effective.

You’re already behind the game if your tax work still relies on manual data entry, endless Excel sheets and having staff look up invoices and transactions. And you may be needlessly burning your people out. By harnessing the power of AI and RPA’s speed, accuracy and predictive capabilities, you can make your tax processes more efficient, cost-effective and accurate, and free your team for other business-focused tasks.

Start Reaping the Benefits of an AI-Enhanced Tax Strategy

Even small, initial deployments of AI and/or RPA can make a huge difference in your team’s tax burden. If you’re ready to explore how to start integrating AI and/or RPA tools into your daily work, Armanino can help you make sense of it all. Find out how our privately held business tax experts can help you take the first steps to ease your administrative tax burden, mitigate risk and ensure compliance.